Indian parliament approves creating new state despite MPs' protests

NEW DELHI (Reuters) - Indian lawmakers passed a bill to create the country's 29th state on Thursday despite mayhem in parliament, as opponents made a futile last attempt to stop the upper house carving landlocked Telangana from coastal Andhra Pradesh.

Demands that the southern region be made a separate state have existed almost as long as independent India. Thursday's vote fulfils a promise made by the government in 2009, and comes just weeks before a national election in April.

Members of the upper house fighting the bill grabbed at papers, brandished signs and tried to drown out Prime Minister Manmohan Singh when he addressed the house.

Last week a lawmaker used pepper spray in the lower house in protest, but to no avail.

"After nearly 60 years of struggle, Telangana is now a reality, it is the 29th state of India. We are rejoicing and are very happy," said V Hanumantha Rao, a lawmaker from the region.

The vote passed with the support of the country's two main parties, who are usually bitterly opposed but are both seeking to build support in the south ahead of the election. The new state will have a population of around 35 million people.

The bill must now be signed by India's president to become law, a formality expected to take place in a few days.

The state capital Hyderabad, where Google, Microsoft and Dell have major sites, will remain the common capital for the two states for a period of 10 years. India's sixth largest city, it is also one of its most prosperous and a big generator of revenue.

The city, which sits within Telangana, has suffered years of strikes and sometimes violent protests for and against the creation of Telangana.

Prime Minister Singh offered a "special category" for the remaining rump of Andhra Pradesh for five years aimed at promoting industrial development.

He also offered tax incentives for both Andhra and Telangana, even as angry lawmakers shouted "tear up the bill and throw it". Supporters of Telangana say the region's economic development has been neglected in favor of the richer and more powerful coastal region.

India carved out three new states in 2000, and the creation of Telangana could revive statehood demands in other regions.

Hyderabad was a princely state when India won freedom from British rule in 1947 and it resisted joining the Indian republic for a year.

The Congress party, which proposed the bill and leads a coalition government, hopes to get the majority of seats in Telangana, which accounts for 17 seats in parliament, because of gratitude from residents for statehood.

The passage of the bill put Andhra Pradesh chief minister Kiran Kumar Reddy in an awkward position, who is a Congress leader but also a legislator whose constituents are opposed to the bill. He announced his resignation earlier in the week to protest against "the injustice done to the Telugu people".

"Political parties have messed up Andhra Pradesh state because of trying to politicize this decision. It is not correct. This decision is wrong," he told CNN-IBN channel.